By Camille Funnell, IFC Communications
Tao Pham and Huong Bui, a married couple in Hanoi, have a special dream for the future. They are hoping for a second child—a sibling for their 12-year-old daughter, Giang Pham.
It’s a goal made possible by their move into a brand-new three-bedroom apartment in a housing development that’s affordable as well as friendly to the environment.
The EcoHome Phuc Loi apartment building where they now live is a vast improvement. Their new apartment is 78 square meters in area, nearly triple the size of the box-like unit where they previously lived. But they pay no more for utility bills today than they did in their previous home—even though electricity prices have gone up.
The couple’s life “is so much better than before,” says 47-year-old Tao. “In our old apartment, we would have to turn on the air conditioning and the lights during the day. Not only do we now have a bigger apartment—very well designed and naturally lit and ventilated—but we now have a community and we are very well-connected with each other. We also have playgrounds and a swimming pool, and on the rooftop, there’s a green area where I can exercise in the morning.”
Clients like Tao and 37-year-old Huong are especially sought after by Capital House Group, the developer of the EcoHome Phuc Loi apartment building, which includes two towers with 680 apartments. For families in the low- to middle-income bracket, the savings offered by going green are important. The company has completed three more green apartment buildings in Hanoi, and another is under construction.
That’s only the start. Capital House Group wants its entire portfolio to be green. These green buildings are key to the company’s sustainability strategy, says Tien Dao, the company’s deputy general director of project development.
“Green, Sustainable, and Smart”
As with many other places around the world, Vietnam is undergoing rapid urbanization. Its rising middle class is on the move: The number of people living in cities is projected to increase from 34.7 million last year to 65.7 million by 2050. That’s more than half of the population relocating to an urban area—all in need of a place to live, work, shop, and carry on their lives. The result? A demand for an extra 12 million square meters of floor space every year, which is spurring the growth of Vietnam’s building sector.
But more construction translates into greater demand for other things. Building construction and maintenance account for one-third of electricity consumption in Vietnam, and this is reflected in the growing demand for power—a double-digit rise since 2000. Power demand has grown at 13 percent a year since 2000 and is projected to grow at more than 8 percent between now and 2030. The building sector also contributes to an annual 12 percent rise in the country’s annual greenhouse gas emissions, which is among the highest rates in the world.
IFC created EDGE (Excellence in Design for Greater Efficiencies)—a building resource efficiency certification program—especially for emerging markets like Vietnam. IFC introduced EDGE to Vietnam in 2015, with support from the government of Switzerland’s State Secretariat for Economic Affairs (SECO) and the Hungarian Export-Import Bank, to help the building sector meet the needs of the country’s fast-urbanizing population. The program guarantees savings of at least 20 percent in energy and water consumption, as well as energy savings in building materials, leading to reductions in greenhouse gas emissions.
In just five years, EDGE has been used across nearly 1.4 million square meters of floor space in Vietnam—accounting for over 50 percent of the country’s total green building market. EDGE-certified buildings in Vietnam have benefitted 50,000 residents, who have saved nearly $1.4 million in utility costs. These buildings have also cut the use of 12,000 megawatt hours per year and avoided close to 10,000 tons of greenhouses gases annually.
With SECO’s support, IFC also advised the government on a new building energy efficiency code that will help the building sector lower greenhouse gas emissions. The code is part of the government of Vietnam’s efforts to achieve its target of reducing greenhouse gas emissions by 8 percent by 2030, in line with its commitments under the Paris climate agreement.
As the country expands, the aim is to be “green, sustainable, and smart,” says Thinh Nguyen, deputy director of the department of science, technology, and environment at Vietnam’s Ministry of Construction. While there are other green certification systems available in Vietnam, EDGE’s green building rating system was suitable to an emerging market like Vietnam, where the aim was for more affordable green housing, rather than high-end housing, he says. According to him, EDGE was outpacing other systems, and the development of its app is an advantage not offered by competitors.
“The development of green buildings brings mutual benefits to many,” Thinh says, adding that while developers benefit as affordable green buildings are easier to sell, there are also significant benefits to the community.
Benefits to Homeowners
Hanoi-based Capital House Group used EDGE in the design of its apartment buildings, and this helped the company win a Financial Times/IFC Transformational Business Award in 2018.
“We believe that for buildings to be sustainable, they need to be in harmony with the environment. They should not impact or put stress onto the environment,” Tien says.
Using EDGE cost the company only about 1 percent to 1.5 percent more in initial construction costs but yielded far more benefits to people buying the apartments, according to Tien, who estimated that new residents could save 30 to 40 percent—even up to 60 percent—on their utility bills.
Thirty-seven-year-old Quang Le and his 35-year-old wife, Thoa Ngo, say they’ve had significant savings in utilities costs since moving into one of Capital House Group's EcoHome Phuc Loi apartments. Thoa says it’s a big benefit for their family. "I think it’s very good that we can save on utility bills and still maintain the quality of living and actually save for the education of the kids."
Capital House Group isn’t the only company in Vietnam focusing its efforts on green buildings. EZ Land, a housing developer established in 2014, is equally concerned with sustainability. The company is completing a 560-unit building called HausNeo, one of 25 buildings in Vietnam to be fully EDGE-certified. EZ Land’s vision is to build 3,000 to 5,000 apartments per year over the next three years, all constructed according to EDGE standards. Its initial focus is on Ho Chi Minh City, where the company was founded.
Like these companies, the private sector is recognizing the advantages of going green. In June, IFC signed investments worth $162.5 million with two other developers who have pledged to use EDGE in their hotels, a residential tower, and a housing development.
For Huong, who lives with her husband Tao in the EcoHome apartment built by Capital House Group, the move to a green building has improved her quality of life in ways she never anticipated.
“I can enjoy the breeze without electric fans and I can enjoy the light without the lamps on. I feel so much more comfortable,” she says. “When I get back from work, I have energy after eating and can go out to communal areas. I connect with others and I talk and interact more with my family.”